Fiscal Year 2022 Defense Authorization and Appropriations Watch
Amelia Cleary contributed to this post.
Overview
The National Defense Authorization Act (NDAA) and the Defense Appropriations Bill are two annual measures that authorize and fund the Department of Defense (DoD) and certain activities of the Department of Energy (DOE) intelligence community (IC); organize agencies responsible for national defense; establish new DoD policies and programs; reauthorize those set to expire; and authorize the appropriations of funds as per 10 USC §114. In short, they shape national defense and serve as essential blueprints for the direction of the military in the coming year. As defined by the congressional budget process, authorizations establish federal government programs while appropriations finance those activities.
Ideally, the authorization and appropriations processes would advance in an orderly, coordinated manner, with perhaps the most confusing aspect being that the authorization and appropriations bills can be considered simultaneously or approved in reverse order. However, in practice, legislating on defense policy and spending is both an inconsistent and time-consuming ordeal. In recent years, continuing resolutions (CRs) and consolidated appropriations bills enacted instead of the regular 12 appropriations bills, not to mention the already existing complications caused by unanimous consent or voice votes, data spread over thousands of pages, dozens of acronyms, and bills reported without accompanying language, have rendered the tracking process particularly frustrating.
Congress has now entered its August recess, and the Senate Armed Services Committee (SASC) has yet to unveil the legislative text of its Fiscal Year 2022 (FY22) NDAA after completing its markup the week of July 19. House Armed Services Committee (HASC) subcommittees released their NDAA marks after finishing their markups during the last week of July. HASC is scheduled to hold its full committee NDAA markup on September 1.
Though the NDAA is not a budget bill and the government will not shut down if it is not passed by October 1st, significant issues can arise without timely passage of authorization bills. As that deadline to avoid a government shutdown approaches, lawmakers have yet to complete a budget resolution and have instead opted for “deeming,” which allows the Appropriations Committees to begin their work assuming adherence to an overall discretionary spending level.
The House Appropriations Committee (HAC) approved its FY22 Defense Appropriations bill on July 13. However, while the full House advanced nine of its 12 FY22 spending measures, a vote on the Defense Appropriations Bill was not held before the recess. With the Senate dealing with infrastructure and reconciliation and the Senate Appropriations Committee (SAC) preoccupied with negotiating a security supplemental, the committee has not yet scheduled a markup for its Defense Appropriations Bill. Echoing his fellow Republican colleagues, SAC Ranking Member Richard Shelby (R-AL) expressed during his opening remarks in the full committee’s August 4 markup of its FY22 Energy and Water, Military Construction-Veterans Affairs (MilCon-VA), and Agriculture Appropriations serious concern about the “parity between the rates of increase for defense and non-defense spending” -- a predictable statement solidifying our instincts that the “parity” issue will frame the defense spending debate coming this fall.
FY22 is a critical moment for Congress and the country’s national security. As is well-known, due to the expiration of Budget Control Act (BCA) spending caps, discretionary spending levels chosen for this coming year could shape the trajectory of defense spending for the next decade. Meanwhile, the U.S. is likely heading into what will be the fourth wave of COVID-19. The effects of climate change threaten infrastructure, health, and safety. New technological developments, cyber threats, and ransomware attacks remain acute. The U.S. Government also continues to pivot its national security focus towards great power competition. China continues to push for global power and increase its military spending. Russia, Iran, and North Korea continue to employ tactics to undermine U.S. influence and weaken Western alliances. As the U.S. pulls troops out of Afghanistan, the Taliban makes gains daily. ISIS and al-Qaida remain the greatest terrorist threats to U.S. interests overseas, while racially or ethnically motivated violent extremists pose an elevated threat domestically.
To a great extent, the defense authorization and appropriations bills we have seen to date align with the Biden Administration’s foreign policy approach to de-emphasize the military, focus on deterrence, and balance present readiness and capacity and future operating environment and modernization. However, it should be noted that the overall strategy is largely inherited, and the bills seem to maintain a similar great power competition tactic against key players. They continue to counter the primary threat of China and, to a lesser extent, Russia and other adversaries like rogue states and terrorists. There are investments in the well-being and safety of military personnel and their families, climate adaptation, energy resiliency, addressing deficiencies in STEM, digital modernization, tech-favoring acquisitions, long-range strike capabilities, domestic production, acquisition policies, and modernizing systems like naval shipbuilding and nuclear deterrents. Notably, however, there seems to be little dialogue as of yet between the “big four” authorizers and appropriators and House and Senate leadership aimed at reaching consensus on priorities and the related topline spending levels.
Ultimately, Washington must consider two choices: will it go its usual route where the Pentagon, Congress, and the White House negotiate over the politics of how much taxpayer money should be spent on this or that? Or will the federal government pursue a comprehensive evaluation and reconsideration of the nation’s defense strategy? This report takes a closer look at where things stand in the FY22 defense authorization and appropriations cycles and the outlook for this fall.
National Defense Authorization Act
House
H.R. 4350, the proposed HASC NDAA, will not be finalized until early September, but the HASC full committee hearing at the end of June and subcommittee markups held at the end of July give insight on what may be included in the House bill. We anticipate the chairman’s mark will be unveiled hours before the September 1 markup and, in keeping with tradition, are expecting a lengthy committee amendment process.
Unsurprisingly, the topline spending number of $715 billion is the key issue. During opening statements in June, Ranking Member Mike Rogers (R-AL) maintained the line of “slashing procurements and accelerating divestments.” It is clear that the growth of non-defense discretionary spending, whether at the Environmental Protection Agency (EPA), Department of Health and Human Services (HHS), Department of Commerce (DOC), or Department of Education (DoE), and the $25 billion unfunded requirements list will be the subjects of controversy this fall. As they have said for months, Republicans would like to see a 3-5 percent increase in topline defense spending above inflation. Chairman Adam Smith (D-WA) stated his “concern is more towards how we are spending that money.”
Within HASC, the committee has explored challenges faced by some of DoD’s most costly programs, including the F-35 and KC-46A, as well as concerns about the future of A-29 maintenance, the extension of Minuteman III, and the continuation of intelligence surveillance reconnaissance. HASC has also coalesced around priorities that include modernization of the nuclear triad, long-range fire systems, hypersonic missiles, Columbia Class Submarines, and the B-21. In terms of unfunded priorities, the new destroyer, F-15X, DDG-51 Flight III, Ground Combat Vehicles (GCV), defense of Hawaii and Guam, and much of what was in the INDOPACOM request from March have been touted as important by Republicans. Cuts to the size of the Navy and shipbuilding industry envisioned by the new 30-year shipbuilding plan, programs like Future Vertical Lift (FVL), combat training center rotations, missile defense, early-stage research such as Navy and Air Force University Research Initiative subaccounts, and end-strength are hot topics.
Another theme throughout hearings has been the changing nature of warfare and survivability, both in reducing vulnerability in cyberspace and irregular warfare and adapting training. Subcommittee on Cyber, Innovative Technologies, and Information Systems Ranking Member Jim Banks (R-IN) noted that his subcommittee mark makes “huge steps towards solving the valley of death.” Chairman Smith stated upfront that he rejected the legacy versus future argument and was later repeated by Rep. Larsen (D-WA) and Langevin (D-RI), who supported open network systems to avoid costly upgrades. Several Democrats, including Rep. Donald Norcross (D-NJ), Rep. Mikie Sherrill (D-NJ), and Rep. Elissa Slotkin (D-MI), have spoken about supply chain issues. Committee members have frequently returned to the topic of emerging technologies, primarily artificial intelligence (AI), as central to the future of defense. And finally, the protection of members, whether from suicide or financial hardships; special pay and pay raises; barrack conditions; or certain command structures regarding recruiting and training, will continue to be big topics. Extremism and revamping how the military handles felonies and misconduct are on course to underpin significant disputes.
Senate
Just as HASC subcommittees were heading into markups, SASC advanced its NDAA to a floor vote with a $777.9 billion national defense topline, including $740.3B for DoD and $27.7B for DOE. It seems the dramatic $25 billion proposed increase to the Senate version is all anyone can talk about. For now, SASC has only made a summary of its bill available. While the bill text has not yet been published, GOP lawmakers appear pleased with the boost in topline funding, while divisions remain among Democrats, primarily those who serve on the Armed Services Committees and progressives who are seeking to cut defense funding levels below the president’s budget request.
Like the HASC version, the Senate bill calls for more investment in cybersecurity and emerging technology efforts, modernization across all domains and operational capabilities, emphasis on research and development (R&D), domestic production, and support for the well-being of all military personnel. The additional $25 billion authorizes some cybersecurity efforts and unfunded requirements and prevents some cuts, such as the scaling back of the C-130 fleet below 292 aircraft. SASC has also highlighted the inclusion of a provision in its bill that would establish a commission to study the budget process that often results in acquisition programs waiting years before getting funding from Congress.
Unfortunately, unlike HASC, SASC markups have been held behind closed doors for the most part, though Readiness and Personnel markups were held in open sessions. During the Subcommittee on Readiness and Management Support markup, Ranking Member Dan Sullivan (R-AK) expressed, “particularly when they are funding other agencies at double-digit increase, they are cutting defense spending real numbers.” Sen. Sullivan indicated he was pleased to see bipartisan support for navy shipbuilding but concerned about overall readiness. In a press release from July 22, SASC Chairman Jack Reed (D-RI) stated that the Senate NDAA “authorizes funding levels and sets policies to equip, supply, and train U.S. forces now and in the future,” noting provisions for pay raises, the health of servicemen and women, cyber defenses, accelerated R&D, and investments in readiness. Ranking Member Jim Inhofe (R-OK) commended the committee for increasing the topline to the 3-5 percent real growth benchmark, also noting the support for “our service members and their families.”
Defense Appropriations
House
In mid-July, H.R. 4432, the proposed HAC FY22 Defense Appropriations Bill, was reported out of committee with a topline of $706 billion despite opposition from all Republicans on the panel. Once again, those opposing the spending bill came out against the topline for not boosting the budget 3-5 percent above inflation. In her opening remarks during the markup, Defense Subcommittee (HAC-D) Chairwoman Betty McCollum (D-MN) stated, “no matter what the topline will be, we cannot continue with ineffective systems.” HAC-D Ranking Member Ken Calvert (R-CA) said later the “promise of new technology in the distant future at the cost of being able to fight tonight is short-sighted.”
Among its many provisions, those regarding mission support; energy-efficient systems; shipyards; domestic production; and quality of life of service members and their families; specifically the 2.7 percent pay raise, medical programs, and the “strong language” tackling sexual assault and extremism were repeatedly brought up by Democrats. Majority Members expressed opposition to adding another navy destroyer -- a provision welcomed by those across the aisle -- but supported funds for Jointless Hull Project, hypersonic testing capabilities, and Space Force testing and scrapping funds for the proposed sea-launched cruise missile and overseas contingency operations (OCO). Democrats called out severe deficiencies in systems like the Ford-class aircraft carrier, F-35, failed missile programs, and sinking amphibious vehicles. Rep. Mark Pocan (D-WI) made clear that “defense contractors are not in defense of this country,” to which several Democrats followed up to support a requirement for contractors to pay a $15 minimum wage.
Notably, the bill paves the way for closing the detention facility at Guantanamo Bay and includes funds to transport Afghans who aided U.S. troops. In the process, appropriators also voted to repeal the 2001 Authorization for the Use of Military Force (AUMF) and the 2002 Iraq War authorization.
Republicans seemed to be generally concerned with lack of or misuse of funding in critical areas, including wage and Davis Bacon Act requirements, R&D that does not lead to procurement of next-generation capabilities, and several unfunded modernization efforts like nuclear command, control, and communications (NC3); Abrams tanks; Humvee retrofit kits; battle management system (BMS); the Self-Propelled Howitzer Paladin Integrated Management (PIM) program’ and amphibious vehicle warships. However, they were pleased with funding for F-35s, F-18 Super Hornets, F-15EXs, Columbia Class Submarines, and Operation Northern Strike.
Across the board, members agree on making cyber a top priority, primarily through securing information technology (IT) systems within DoD and AI, 5G, and batteries. Combating extremism remains disputed. The 2.7 percent pay increase provision seems to be a minor point of contention, with Democrats supporting the number and Republicans requesting an increase. There were warnings from both sides of the aisle about the need to avoid a CR later this fall.
Senate
SAC began the process of marking up its FY22 appropriations bills on August 4 but has yet to schedule a markup for the Defense Appropriations Bill. Last week, Senate Minority Leader Mitch McConnell (R-KY) and Chairman Shelby stated the process would stall if the topline is not boosted for defense. During floor remarks, Leader McConnell said, “Number one, Democrats will need to honor the long-standing bipartisan truce that provides parity for defense and non-defense spending growth…And number two, we must have agreement that we’re going to keep long-standing bipartisan policy riders in and new poison pill riders out.” He echoed the comments made by most GOP lawmakers.
In their push to have defense included in the infrastructure bill, GOP lawmakers offered a long-shot amendment to add $50 billion for defense-related infrastructure to the recently passed Infrastructure Investment and Jobs Act. The amendment was ultimately defeated on the Senate floor. Among its funding allocation, the amendment proposed $25 billion for shipyards; $4 billion for test and training ranges; $2 billion for high priority military construction projects; $4 billion for facilities sustainment, restoration, and modernization; $3.85 billion for DOE/National Nuclear Security Administration (NNSA) infrastructure; $4.5 billion for military depots; $2.5 billion for ammunition plants; and $2.5 billion for 5G rollout to military bases.
Outlook
At present, both the defense authorization bill and appropriations have a long way to go before becoming law. Neither chamber is expected to finalize their bills before the September 30 end of the fiscal year, and there is much speculation that the FY22 appropriations process as a whole will not be resolved until December. When it comes to defense, there are fundamental differences that must be hammered out, with the topline being central.
Top Republicans have taken an early position that they need to see a bigger number for topline spending in the Defense Appropriations Bill to offer their support. The additional $25 billion in the SASC bill is more than likely to stay and puts pressure on HASC to endorse something similar. Sen. Reed predicted the increase would eventually “be part of the Senate appropriations bill.” In the meantime, given the failure of the Senate infrastructure amendment that would have boosted defense spending by $50 billion, Sen. Thom Tillis (R-NC) has said he would “probably take another crack at it on another vehicle,” referring to the NDAA.
At the same time, progressives continue to articulate their concerns about nuclear spending, the Pentagon’s lack of a complete audit, and the ever-increasing topline, according to Rep. Pramila Jayapal (D-WA). Unfunded requirements will also continue to be debated. Internal tension in HASC regarding the path forward for the Navy has made a few headlines. Legacy systems and certain acquisition reform areas are bracing more disputes as well. The AUMF repeal may cause some issues, particularly among GOP lawmakers.
With the delayed release of the president’s FY22 budget request giving way to a late start for both the FY22 NDAA and appropriations cycles, it does not seem as though the Biden Administration’s defense approach will shift too far away from President Trump’s, at least in this first year. Additionally, it is worth pointing out that the Future Years Defense Program (FYDP) typically submitted with the budget request was absent in this year’s budget request. At the same time, other initiatives like the Navy’s 30-year shipbuilding plan or the Marine Corps’ Force Design 2030 effort seem to be seriously limited in their long-term planning.
At this point, a CR is a very real possibility, although no one wants it. Additionally, questions remain regarding whether defense spending will operate on just a short-term extension at current levels come October or if the political storm brewing over topline spending could lead to a year-long CR for defense. A CR lasting a year is, as Rear Admiral John Gumbleton, said “the worst possible scenario.”
What remains clear is that U.S. near-peer competitors have already entered into the new era of warfare, and the U.S. may be dawdling by comparison. The Nuclear Posture Review is underway as of mid-July, but it has been over three years since the National Defense Strategy (NDS) shifted the U.S. Government’s defense focus to long-term strategic competition with revisionist powers and over four decades since there was a comprehensive update to the Pentagon. Unanswered questions remain as it relates to how the NDS is being overwhelmed by programs and tasks that have marginal return, flawed timelines, or are total failures. Force structure modernization of the armed services will only experience increased pressure, and competition for resources will be ruthless.
There is no doubt the Biden Administration has been tasked with confronting many national challenges during its first several months in office. Based on where we stand in the FY22 defense authorization and appropriations cycles, it seems that a reevaluation of the NDS has not been a top priority. Going forward, we expect the administration and national security leaders in Congress to focus on two critical issues: how the U.S. will prioritize threats and what the primary role of DoD is, and what level of urgency should be associated with the China challenge.
In her opening statement to HASC, Stacie Pettyjohn, a Senior Fellow and Director of Defense Programs at the Center for a New American Security (CNAS), set forth this warning: “addressing today’s needs will likely continue to prevent investments in the capabilities needed for tomorrow. And as the military tries to do more with less, it may find itself doing everything, but doing few things well.”